Earnings Multiplier

(redirected from Earnings Multipliers)

Earnings Multiplier

The price of a security per share at a given time divided by its annual earnings per share, adjusted for current interest rates. Often the earnings used are trailing 12-month earnings, but some analysts use other forms. The earnings multiplier is a way to help determine a security's stock valuation, that is, the fair value of a stock in a perfect market. It is also a measure of expected, but not realized, growth. It is a variation on the price-earnings ratio.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
Final-demand earnings multipliers are based on the change in final demand produced by an activity such as tourism spending in the region and equals the output multiplier for an industry multiplied by the household-row entry in the direct requirements table.
Earnings multipliers for the tourism-related industries in Table 3 can be compared with those found in our review of studies employing tourism multiplier methodologies for U.S.
TABLE 5 TOURISM OUTPUT AND EARNINGS MULTIPLIERS IN SELECTED U.S.
Comparing the implicit final-demand output and earnings multipliers in Table 7 with those available for other U.S.
The direct-effect earnings multiplier indicates the ratio of total earnings generated by the change in final demand to the earnings directly generated.
For example, to obtain the direct-effect multiplier estimate of total earnings associated with visitor spending on hotel lodging in Washington, D.C., we multiply the earnings directly generated in row D, column 2 ($230.2 million) by the direct-effect earnings multiplier in row D, column 4 (1.3067) to obtain the direct-effect multiplier earnings in row D, column 6 ($300.9 million).
The tourism final-demand earnings multiplier (0.166) ranks 10th out of 38 aggregate industries, while the direct-effect employment multiplier for visitor spending (9.06 jobs per $1 million in final demand) ranks 5th.